Sounding the Alarm for Electrical Steel

A letter sent to the White House in late May, signed by, among others, the American Public Power Association, NRECA, the Edison Electric Institute, Gridwise Alliance, and the National Electrical Manufacturers Association, sounded the alarm for dealing with growing shortages of electrical steel.

“As organizations representing the electrical steel value chain, we are increasingly concerned about the skyrocketing demand and limited availability of domestically
produced electrical steel, which is a core component to the industries and products that we represent and vital to expanding electrification in the United States,” said the letter.

“We write to urge your administration to make it clear that electrical steel is critical to the national and economic security of the United States and to prioritize actions that will create a sustainable supply.”

The letter continued, noting that, to deliver on the goals and visions of the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA), it is vital that the federal government recognize and support the domestic production of electrical steel to meet the unprecedented demand for electrification and grid modernization and resilience initiatives.

“Electrical steel, including grain oriented electrical steel (GOES) and non-grain oriented electrical steel (NOES), is a vital component in the manufacturing of a range of critical electrical products,” said the letter. Electric motors, transformers, electric vehicle chargers, generators, and other critical electrical equipment all require electrical steel due to its unique properties that reduce power loss.

“Shortages of domestic electrical steel are contributing to significant and persistent supply chain challenges across our industries,” said the letter. “The limited availability of domestically manufactured electrical steel poses challenges to the widespread adoption of electric vehicles, delays timelines for utilities to restore power following natural disasters, and is a contributing factor to an insufficient inventory of distribution transformers to meet the demand for new home and commercial construction.”

As reported by the Department of Energy (DOE) in 2022, the United States is dependent on a single manufacturer for GOES, which severely limits electrical manufacturers’ ability to source domestically and meet certain domestic content thresholds.

While two domestic manufacturers have committed recently to increase GOES production, even with this expanded output, domestic supply levels will still fall far short to meet electrification goals and satisfy demand created by the IIJA and IRA. “Further, plans to expand domestic steel capacity and manufacturing of critical electrical equipment, such as transformers, are now in flux as DOE contemplates new efficiency standards that would upend the market and manufacturing process,” said the letter.

“Now is the time to demonstrate leadership by prioritizing the critical importance of
electrical steel and growing domestic manufacturing jobs by working with Congress to put requisite financial resources toward shoring up domestic supply,” the letter continued. “The federal government can guarantee purchase of GOES and NOES up to a defined amount, as needed by critical electrical industries, to serve a more electrified economy as well as incentivize expanded manufacturing capacity.”

The organizations suggested that the first step be the convening of an “Electrical Steel Summit” to bring together stakeholders for a strategic discussion on the current challenges to sustaining and growing domestic production of electric steel. “The Summit would bring together users and manufacturers of electrical steel such as electric utilities, electrical manufacturers, automobile manufacturers, steel manufacturers, labor unions, home builders and others to help solve the current supply chain crisis that threatens both the national security and economic outlook for the United States and to deliver on this Administration’s goals for electrification and decarbonization,” said the letter.

“We urge your Administration to make developing a sustainable supply of electrical steel in this country a top priority now and going forward,” it concluded.


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